Yesterday I wrote about the burgeoning China internet market and how it is sneaking up, if not passing the U.S. in size. It’s always hard for day two of a conference to equal the opening day. In this case, day two was a day to revisit some contacts made during the first day and another round of dueling conference tracks. While ad:tech is historically both a conference and trade show, this show did not have the typical crowd of booths or booth traffic. As many of you know who have attended an ad:tech event in the U.S., the search and PPC markets are well represented, in fact by some accounts overly represented in the floor shows. There is no question that search is a major factor in China. But it has not evidenced itself in the trade show as yet relative to SEM and SEO companies.
According to Kevin Ryan’s panel, there are 300,000 searches a day in China and growing. That’s compared to 400,000 a day in the U.S. And the U.S. has flattened out in growth while the China market is rapidly growing. In addition to the major multi-national search companies/portals (Google, Yahoo!, and MSN) there is a strong local entity in Zhongsou (roughly translated as China Search). So, unlike the U.S. where search took some time to grow, search is already a major factor in Chinese internet usage.
As mentioned yesterday, IM, especially wireless IM are massive in China. The consumer market seems to be taking a different shape here versus the U.S. and Europe. The youth market combined with the third screen phenomenon means that the “web anywhere” will be a large factor as China and the rest of the Asia market grows. We reported yesterday that the Synovate “Young Asians Study 2005” showed 39 percent of media usage among 16-24 year olds in the major Asian countries is web-based. Wednesday’s conference compared that to TV usage at 40 percent. This is an astounding data point.
Consumer generated media was another important topic on Wednesday’s panels. The use of BBS (message boards) has also emerged as a huge factor in China. There are 40 million message boards in China with 35 million visitors a day by one estimate. The conversations going on each day are in the millions. A major form for the BBS forums is on portals where there is a lot of discussion about products and corporations. For example, the historical conflicts between China and Japan result in a significant backlash towards autos and other Japanese products sold in China on BBS forums. The products still sell, but the issue is a lively one. As this form grows, it will be a major PR problem or opportunity for those doing business in China.
The discussion of metrics took many forms on day two, both through the panels and in offline individual conversations. It seems that there are governmental issues with the permission to recruit for panels. This is the major barrier to companies like comScore and Netratings successfully documenting the real size and actual usage patterns in China. This also affects the ability of companies like Dynamic Logic and Insight Express to perform awareness research.
The use of third party ad serving (3PAS) is also not a major factor in the orient which limits the ability to track and optimize campaigns. One panelist pointed out that Yahoo! in Japan only allows one creative change per campaign. For China, the different views from the multi-national companies and Chinese companies are interesting and important. As mentioned in yesterday’s article, much of the interactive advertising purchased on Chinese portals and other major sites is time, rather than impression based. There is a push by the multi-national agencies to move to a CPM model and to embed “web bugs” that would permit tracking and optimization. To date, the Chinese publishers resist this move to a more accountable and more flexible purchasing pattern. The Chinese view is important according to several local panelists. One of the major factors in Chinese Web advertising is the ability of top management on the client side to see their advertising, thus the preference for the time based selling model. In addition, there is distrust of the research and 3PAS based data. There is much more inclination to trust the advice of one’s peers on the effectiveness of a campaign. This mistrust will need to be overcome if the multi-national methodologies of performance base advertising is to take hold.
This first edition of ad:tech in China was definitely bi-polar. From one side, the westerners served an important and necessary role in showing the Chinese market our methods, routes to success and case studies. From that standpoint, many of the Chinese audience approached the conference as an advanced study course. From the other side, there were glimpses of issues that were unique to China such as usage patterns, sales methodologies and metrics which are unique to China. Nowhere in this forum was there an opportunity for some “Chinese only” panels to vet their issues. While such open discussion may be counter to Chinese culture, it is clear to many observers that panels dominated by Chinese rather than westerners will be an important component for the future. While it would be a mistake to swing all the way in that direction, a more balanced approach may be beneficial in the future.
A Letter from Shanghai (Part one of today's ad:tech coverage)
David L. Smith is CEO of Mediasmith, an Integrated Media Agency based in San Francisco. He speaks regularly at industry events including ad:tech and iMedia.